The emergence of the String of Pearls is indicative of China’s growing geopolitical influence through concerted efforts to increase access to ports and airfields, expand and modernize military forces, and foster stronger diplomatic relationships with trading partners.[4] The Chinese government insists that China’s burgeoning naval strategy is entirely peaceful in nature and designed solely for the protection of regional trade interests.[5] An analysis by The Economist also found the Chinese moves to be commercial in nature.[6] Although it has been claimed that China's actions are creating a security dilemma between China and India in the Indian Ocean, this has been questioned by some analysts who point to China's fundamental strategic vulnerabilities.[7]

In 2005, the U.S. consulting firm Booz Allen Hamilton came up with the “string of pearls” hypothesis, which posits that China will try to expand its naval presence by building civilian maritime infrastructure along the Indian Ocean periphery.

China’s rapid economic development over the course of the last quarter century has been heavily dependent on foreign sources of energy, and it is likely that foreign sources of energy will prove even more critical to the continued growth of the Chinese economy. The sea lines of communication that link the Chinese mainland with ports throughout the Middle East and coasts of Africa, have become a major source of conflict with respect to China's future energy security.[3]

China is the world's second largest oil consumer and the largest oil importer. Oil consumption is expected to grow in China by 5.8% annually until 2015. Oil imported from the Gulf States and Africa comprises 70% of total Chinese oil imports, and remains China’s most critical source of energy apart from domestic coal production. In order to meet future demand, China has signed a number of long term contracts to develop Iranian oil fields and to build a pipeline, refinery, and port in Sudan for oil export.[3]

The oversea transport of oil from existing production areas will continue to remain the primary mode of energy importation for the foreseeable future. Efforts to secure new supply lines in Central Asia have proven difficult, with poor infrastructure, political instability, logistical challenges, and corruption hampering energy development there.[3] Energy security also sits at the core of China’s anti-piracy efforts, which figure into its larger maritime objectives. The expansion of Chinese naval patrols off the Coast of Somalia, and China’s decision to join multi-nation defense patrols in 2010, indicate China’s greater assertiveness in the policing of shipping corridors.[8]

The critical sea lines of communication that connect China to Middle Eastern oil-producing states traverse the South China Sea, making it a key strategic region, and potential trouble spot, for the Chinese government. Chinese naval vessels heavily patrol South China Sea waters, and conflicting territorial claims in the region have periodically erupted in naval confrontations.[9][10] Chinese efforts to control the South China Sea have therefore figured significantly in speculations about the wider ambitions of the Chinese central government in the construction of a power projection chain across Asia.

The Paracel Islands

The central government’s efforts to exercise greater control in the region began in earnest after the power vacuum created by the withdrawal of US forces from the Philippines in 1991.[11] Although skirmishes with neighboring powers, most notably with Vietnam during the Sino-Vietnamese War of 1979, have been a fixture of post-war Chinese foreign relations, the Chinese government began aggressively asserting its territorial claims in the region only within the last two decades. Interest in the region has historically extended to the rich fishing and mineral resources known to exist there.[12] However, islets in the regions can also be used as air and sea bases for intelligence, surveillance, and reconnaissance activities, as well as base points for Chinese ballistic missile submarines and potential aircraft carrier battle groups.[9]

The Chinese naval base on Hainan Island is generally considered the first of the pearls or potential pearls.[12] Recent construction of an underwater submarine base on Hainan, in addition to the sprawling facilities already located there, seems to further confirm the perceived importance of Hainan as a base of control for China’s claims in the South China Sea.[9]Woody Island, the largest of the Paracel Islands, hosts an upgraded Chinese airstrip and has also been identified as a pearl.[2]Sansha, the prefectural-level city established on Woody Island, maintains a division-level garrison that also oversees Chinese claims in the Spratly Islands, extending a small but permanent military presence across Chinese claims in the South China Sea.[8] A $20 billion Chinese proposal to fund the construction of a canal across the Kra Isthmus, which would allow ships to bypass the Strait of Malacca altogether, has also broached concerns of a Chinese-controlled corridor linking Chinese ports and facilities elsewhere in the South China Sea to the Indian Ocean.[3][13]

Chinese possessions in the Indian Ocean consist primarily of commercial ports owned and operated by Chinese firms, as well as resupply stations operating in agreement with the Chinese central government. The two largest projects consist of a Chinese-financed commercial shipping center in Hambantota, Sri Lanka and a Chinese-controlled deep-water port near the mouth of the Persian Gulf in Gwadar, Pakistan. Both sites have raised the concern of neighboring powers, most significantly India, which fears the possibility of a string of Chinese bases situated just off its coast.[9] Chinese investment in Hambantota, and Sri Lanka’s dialogue partner status in the Shanghai Cooperation Organisation (SCO), is seen by some Indian analysts as reflective of a wider encirclement strategy on the part of the Chinese.[14][15] The port at Gwadar, which is connected to the Karakoram Highway linking Western China and the Arabian Sea, is of even greater concern to the Indian government, which views it as powerful evidence of Chinese and Pakistani collusion against Indian security and economic interests.[16]

For both Pakistan and China, the Gwadar port offers a number of key benefits. For the Pakistani government, the Gwadar port is seen as having the potential of hedging against a potential Indian blockade of the port of Karachi, which currently handles 90% of Pakistani seaborne trade. For the Chinese central government, which has funded the majority of the $1.2 billion construction, Gwadar represents an important strategic foothold situated only 240 miles from the Strait of Hormuz.[3] Chinese government officials have specifically identified the growing militarization of Central Asia, as a chief motivation in the construction of the Gwadar project.[4] In 2013, the state-owned China Overseas Port Holding Company was officially granted control of the port’s operation, further consolidating Chinese influence over the Gwadar project.[17]

Similar port construction projects are also underway in Burma and Bangladesh. The Chinese government has financed a container shipping facility in Chittagong, Bangladesh, which is widely identified as a pearl.[9] However, despite reports of Chittagong’s potential military role for the Chinese, the Bangladeshi government has insisted that the port is of an entirely commercial nature and declared it off limits to military vessels. Furthermore, given Bangladesh’s close economic ties to India, and agreements for the expansion of Indian investment in Bangladeshi infrastructure projects, Chittagong’s military significance for the Chinese is exaggerated.[18]

Strategists have also identified the Marao Atoll, in the Maldives, as a potential Chinese military base of operations. Reports in the Indian press have referred to Chinese plans to construct a submarine base in Marao since at least 1999. However, to date there exists no evidence that suggests a Chinese military presence of any kind in the Maldives. Indeed, it is argued that Marao cannot possibly support the type of complex infrastructure required for submarine operations. And given the nature of diplomatic and military cooperation between India and the Maldives, Chinese encroachment in the Maldives Archipelago is highly unlikely. Many analysts have suggested that Chinese Indian Ocean bases are purely commercial because they would be nearly indefensible in wartime.[15] A large component of China’s efforts to establish ports and bases in the Indian Ocean is the result of a need to formalize logistics support agreements for Chinese naval forces conducting anti-piracy efforts off of the Horn of Africa[19] In this regard, Chinese naval strategy is consistent with the interests of India and its Western allies.

Chinese state-owned companies are also responsible for the construction of a railway link between Khartoum, the capital of Sudan, and Port Sudan, the country’s major port on the Red Sea. Although Sudanese oil makes up only a fraction of total Chinese imports, China has invested over $10 billion in infrastructure projects in the country to take advantage of its substantial oil reserves. Chinese operations in Port Sudan are substantial, but limited completely to the oil export[20][21] China has also agreed to finance and build a $10 billion port in Bagamoyo, Tanzania, which is expected to be completed in 2017 and handle 20 million shipping containers annually.[22] The Chinese government has denied that their investment in the port of Bagamoyo is intended to create a military capability.[23]

In 2007, the Indian Navy published the “Indian Maritime Doctrine”, a document outlining prospective Indian naval strategies. It describes ambitions for an active Indian naval presence from the Strait of Hormuz to the Strait of Malacca. Furthermore, the doctrine makes explicit mention of the need to police international shipping lanes and control choke points of Indian Ocean trade in particular.[16] In 2007, India opened its second overseas military listening post in northern Madagascar, with the aim of better overseeing shipping movements through the Mozambique Channel. The Indian government has, with the same intentions, hosted negotiations with Mauritania regarding the construction of an airstrip for Indian surveillance aircraft, as well as organized the construction of radar stations in the Maldives.[16] In 2011, the Indian government further announced that the government-financed deep-water port in Sittwe, Burma is to be functional by June 2013, with an additional highway connecting the port to India to be completed by 2014. The construction of the Sittwe port is often cited as evidence of a concerted strategy on the part of India to counterbalance growing Chinese influence in Southeast Asia.[30]

Like China, India is heavily dependent on foreign oil producers for its energy needs. About 89% of India’s oil arrives by ship, and the burning of oil provides for approximately 33% of India’s energy needs. The protection of the major sea lines of communication is therefore recognized as an economic imperative.[16] In this regard, India has historically focused heavily on anti-piracy and counter-terrorism efforts across the Indian Ocean. Most notable among these is Operation Island Watch, the 2010 effort to patrol India’s western seaboard against Somali pirates.

Indian Ocean Piracy

A number of these counter-terrorism and anti-piracy efforts have been conducted in coordination with American forces, though Indian officials have traditionally restricted joint military exercises to common interest initiatives, often those under UN sanction.[31] Nevertheless, renewed US interest in countering the threat of Islamic terrorism in South Asia has pushed India and the United States towards more substantive military cooperation. For US military officials and strategists, this growing bilateral relationship is widely seen as an opportunity to counterbalance threats of Chinese regional hegemony. Efforts for bilateral cooperation against rising Chinese power are bolstered by popular fears that China’s expanded presence in the Indian Ocean threatens India’s economic and military security.[12] Dean Cheng, a notable China expert at the Heritage Foundation, has strongly urged that the United States continue to partner with India to counter China's influence in the Indian Ocean.[32]

The US Navy has unparalleled power projection capabilities and operational strength, and is the major naval force in the waters of South and Southeast Asia.[3] However, the Chinese central government’s explicit ambitions for the creation of a “new security concept”, one that can challenge US dominance in the region, has precipitated a greater willingness on the part of the Chinese to challenge US influence in Asia. China’s renewed assertiveness in the South China Sea is of particular concern to US officials, who see China’s rise as a threat to the United States’ role as a provider of regional and global stability.[3]

The “Pivot to Asia” strategy of the Obama Administration is designed to engage China by consolidating and expanding diplomatic and economic relationships with existing regional partners, particularly in East Asia and Southeast Asia. This approach has emphasized multilateralism, as exemplified by increased US engagement with ASEAN and efforts for the formation of the Trans-Pacific Partnership, a pan-Asian free trade deal.[33] However, the US has also sought an expanded and more cooperative military presence in the region, evidenced by the 2006 Cope India exercise and others like it.[3] Strong US relations with its key regional allies, including Japan, Taiwan, and South Korea, have been reinforced by strengthened cooperation with countries threatened by Chinese control, such as the Philippines.[30]

Two of the disputed Senkaku/Diaoyu islets – Kitakojima/Beixiaodao (left) and Minamikojima/Nanxiaodao (right)

Japanese apprehensions regarding the development of an interconnected system of Chinese military and commercial ports centers primarily on the protection of trading interests. 90% of Japan’s imported oil flows to Japan through the sea lanes of the South China Sea, and any undue Chinese influence in the region is seen as a potential threat to Japanese economic security. Moreover, Japanese officials envision that, in the case of a more pervasive Chinese power projection capability in East Asia, territorial disputes between China and Japan in the East China Sea and Philippine Sea might escalate to a point of outright military confrontation.[9] In particular, the Senkaku, which is claimed by China but controlled by Japan, and Ryukyu island chains, are identified as key friction points between the two countries. Both island groups are located off of China’s eastern seaboard and must be navigated by Chinese naval and commercial vessels sailing on their way to the wider Pacific Ocean. Furthermore, the proximity of both island groups to Taiwan offers them an attractive operational role for Chinese military planners looking to mitigate US naval superiority in any potential war over Taiwan.[34]

In 2010, in part because of increased diplomatic tension with China, Japan announced revised National Defence Program guidelines, which advocate enhanced surveillance and reconnaissance operations in the Ryukyu islands, as well as the increased support for submarine activities.[9] At the US–Japan Security Consultative Committee on June 21, 2011, the Japanese and US governments issued a firm joint declaration announcing intentions for the maintenance of the strong US naval deterrent in the Taiwan Strait and the expansion of security ties with ASEAN, Australia, and India. Japanese Prime Minister Shinzo Abe's has described this new China-wary foreign policy as having the potential to create an "arc of freedom" between Japan and its traditional allies the US and Australia, and India.[35] This project is bolstered by the 2008 security cooperation agreement between Japan and India, which calls for greater maritime security coordination and diplomatic cooperation on regional issues.[36]

The Australian government has repeatedly expressed concern about mounting tensions in East Asia and Southeast Asia, with the security of Australia’s so-called "Northern approaches" seen by lawmakers and officials as essential to the security of seaborne trade and energy supply routes.[9] As a reaction to China's growing influence, and as part of the United States' proclaimed “Pivot to Asia” strategy, the Australian government approved the stationing of US troops and aircraft in the northern Australian city of Darwin in late 2011.[37]